Question

Question 13.
From the following particulars, prepare the proprietor’s Capital Account:
1st April, 2017 – Commenced business with cash – ₹ 2,00,000
31st March, 2018 – Net Loss as per Profit and Loss Account – ₹ 18,000
31st March, 2018 – Drawings during the period – ₹ 15,000
Balance the same and explain what the closing balance indicates.

Answer 1

The Capital amounts to Rs 167,000

Explanation:

The capital account is as:

Capital Account

Debit Side

2018

31st March   To Profit and Loss A/c                      Rs 18,000

31st March   To Drawings A/c                               Rs 15,000

31st March   To Balance c/d                                 Rs 167,000

Total                                                                        Rs 200,000

Credit Side

2017

1st April     By Cash A/c                                         Rs 200,000

Total                                                                        Rs 200,000

• Closing balance is the accounting closing balance which is described as the amount which is carried forward to the next or forward accounting year. It is the difference among the debits and credits in the ledger at the end of the accounting year, which is to be taken to next year.

• It indicates the closing amount of account, which is left at the end of the year to the business.

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